Transfer Pricing Associates

Changes in the UK Patent Law

post Thursday December 13, 2012


The purpose of filing for a patent is to receive benefits from the protected idea. However, in order to extract value from the patent the owner company has to convince the market to comply with its patent and the rights that come along with it. Convincing the competitors most often is only possible through litigation which can be extremely costly. Many companies look for litigation funding which has been allowed in the UK since the 1960s.

In the UK, changes are projected to be made to the patent actions with regard to litigation costs and funding by April 2013. Under the current laws, litigation funding is allowed on the basis that it advocates justice. The most common key players in the recent 5 years were Third Party Funders. In order to receive funding from these Third Party Funders, a set of criteria have to be met by the applicant. These include prospects with at least 60% probability of success assessed by a recognized solicitor or barrister; a return on investment ratio of at least 1:4; abundant resources to pay the costs and damages awarded; and an acceptably short resolution, preferably less than 5 years.

Currently, the resources which are required to set up a litigation case with funding include the involvement of a patent or research specialist; financial specialists; lawyers; ATE insurance brokers; and the litigation funding. Managing all these resources can become overwhelming and costly. For this reason, HLP3, the first integrated solution for monetizing patents, has been introduced, which aims to bring all the required parties into a single cohesive process which results in a fully funded litigation.

HLP3 proposes to provide the user of the service with a report on validity, infringement, and financial analysis. An advantageous feature of HLP3 is that only the reports with promising results would be sent to the Patent Counsel, who would then evaluate and assess the features of the patent. If the proposed criteria are met, then the case will be forwarded to the ATE insurers for a risk assessment. When the insurance is approved the patent owner can exercise an option agreement and its litigation will be funded. The length of this process is between 12-16 weeks.

Starting from April 2013 ATE insurance premiums will cease to be recoverable from the defendant party; and neither will success fees due to claimant’s lawyers could be refunded.

The best way to maximize returns is to start the litigation process before April 2013, so the applicant can benefit from both the HLP3 and the old legislation which allows refunds of both ATE insurance premium and success fees.   

Sources: IPO.Gov

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